Another moment here which is going to force decision, buyers are needing to complete at a minimum their targets while the extension targets still remain locked. While the other side of the coin comes from those looking to play the long term structural decline in the dollar, and sellers are flirting to react sharply at the highs in the range with a plan to defend resistance.
How did we end up here ❓
It boils down to this long-term macro chart which looked very promising for sellers:
The further we zoom in, the more details we can add...
To add more context, since 2018, we have been tracking the highs in dollar and we shall have to content ourselves with the "throwback" chart which briefly explains the truth behind the technical opening and structural decline.
What does this all mean ❓
We are trading inside an impulsive macro leg to the downside with MT and LT targets in the DXY located at 88.2x and 74.8x respectively. This does not rule out a pullbacks/retracement, and it would be perfectly valid for buyers to break the chop to the topside only to receive another later in the year / early 2021. A continuation of dollar strength and breakout of the range would put pressure on the soft hand sellers that are unaware of the larger forces in play, capital flows are not linear in direction.
From a technical perspective we can play the breakup with a momentum gambit, taking 94 will open 94.6x and 94.8x for a quick visit. Anything else beyond that is currently locked for buyers. If you are a seller here you are looking to sell as cheaply as possible and fading a break of 94 handle is in play.
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